ANNEXURE FOUR & FIVE: Socio-Economic Impact of HIV/AIDS on KwaZulu Natal The Management Challenge

1. ANNEXURE FOUR & FIVE:Socio-Economic Impact of HIV/AIDSonKwaZulu NatalThe Management Challenge Peter Badcock-Walters & Lucinda Franklin HEARD (Health Economics & HIV/AIDS Research Division) University of Natal

2. ANNEXURE FOUR:Socio-Economic Impact Lucinda Franklin Research Fellow HEARD

3. Presentation Structure • HIV in South Africa • The Demographic Impact • Economic Impact • Social Impact • Socio-Economic Determinants for KZN • Summary and Conclusions

4. HIV in South Africa

5. ANC Results

6. Age Specific ANC Results

7. HIV Positive South Africans

8. Demographic Impact

9. AIDS and non-AIDS Deaths

10. Forecast Mortality

11. AIDS Orphans

12. Economic Impact

13. Channelsof Economic Impact INDIVIDUAL Smaller population HOUSEHOLD MORTALITY LABOUR MARKET MACRO ECONOMY Change in age structure HIV/AIDS FIRM/SECTOR MORBIDITY GOVERNMENT

14. Individual level • Incubation period (HIV) • 5-8 years from infection until the onset of AIDS • Very little economic impact during this time • AIDS phase • Period of escalating illness • Ability to work is reduced • Cost of care increases

15. Household level • Often more than one household member is infected (sexually transmitted) • Infections are concentrated among the primary carers and earners • Double impact of reduced income and increased costs of care

16. Household level cont…. • Less money available for other consumption • Increased need for care diverts time and effort from other tasks • children, often girls, may be removed from school to provide care or generate income • Death(s), often multiple, lead to funeral costs which are usually large • Disaving may result

17. Impact of HIV/AIDS in urban households General population Families living with AIDS 30 000 Francs CFA 25 000 Monthly income per capita 20 000 15 000 Monthly consumption per capita 10 000 5 000 Savings/Disavings 0 – 5 000 Source: Simulation based on data from Cote d’Ivoire (Bechu, Delcroix and Guillaume) 1997

18. Labour Market • AIDS impacts on the sexually / economically active population • AIDS related illness leads to: • reduced productivity due to absenteeism, high turnover etc • AIDS related death leads to: • change in labour force and labour participation • change in age structure of labour force • change in available skills and experience

19. Company costs Timeline Progression of HIV/AIDS in the Workforce Economic Impact on the Company Year 0 Employee becomes infected No costs to company at this stage Morbidity-related costs are incurred (e.g. absenteeism, individual & workforce productivity, management resources, medical care & insurance) Morbidity begins Year 1-5 Termination-related costs are incurred (e.g. payouts from pension or provident fund, funeral expenses, loss of morale, experience, & work-unit cohesion) Employee leaves workforce (resigns or dies) Year 6 or7 Company hires replacement employee Year 7 or 8 Turnover costs are incurred (e.g. recruiting, training, reduced productivity) Effect on production costs, production process, • demand for capital/labour, output prices and • competitiveness

20. Consumer Markets • The absolute number of consumers will be reduced from what it would have been • The age structure of the market will change • The structure of demand will also change • eg increase in demand for medical goods and services • Consumption in South Africa is constrained more by spending power than by consumer numbers. Who is infected will play a major role in determining the degree of impact

21. Sectoral Impact • Impact will vary in degree across sectors • Some sectors are susceptible to infections • While others are vulnerable to the impact • Those sectors that are both vulnerable and susceptible will be the most seriously hit • The impact on critical sectors in the economy will play a major role in determining the macro economic impact

22. Government Finance • Increased demand on government services • Health • Welfare • Poverty reduction • Although demand will increase, the level of spending on services will be determined by policy decisions

23. Social Impacts

24. Systems • Health care • Increased demand • Decreased ability to offer services as a result of staff loss • Crowding out • Similar impact on Welfare services • Education • Reduction in demand • Greater reduction in ability to offer services

25. Socialisation • Psychological impact on children • Parental illness and death • Educator illness and death • Increased death in the community • Care of orphans • The need to care for orphans will increase • Ability of traditional arrangements to cope will be eroded • Long term impact?

26. Socio-Economic Determinants for KZN • High mobility rates • Migrancy • Well-developed transport infrastructure • High poverty rates • Women among the poorest in province • Female-headed households poorest • Rights and status of women • Rape and domestic abuse rates • Cultural barriers deny basic rights and privileges

27. Socio-Economic Determinants for KZN… • Labour migration rates • Direct result of lack of employment opportunities in rural areas • Apartheid labour system • Men obliged to leave homes/families to reside in single-sex hostels • Concentrated development efforts in cities • Commercial sex work • Prospers in these conditions

28. Summary and Conclusions

29. Conclusions • HIV has already reached very high levels in South Africa and is set to rise for a few more years • The resultant increase in death will change the structure of the population • Households and individuals will feel the greatest economic impact • The impact on companies and sectors will vary • The macroeconomic impact will be felt in the long term

30. Conclusions… • Health care, welfare and education systems will be adversely affected • HIV/AIDS is the single greatest threat to development in South Africa • Our greatest concern is the impact that HIV will have on our children • HIV/AIDS not simply a public health problem – it demands a committed & innovative multisectoral response